UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________.

Commission File Number: 001-33519

Public Storage

(Exact name of registrant as specified in its charter)

Maryland	93-2834996
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
701 Western Avenue, Glendale, California	91201-2349
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 244-8080.

Former name, former address and former fiscal, if changed since last report: N/A

Securities registered pursuant to Section 12b of the Act:

Title of Class	Trading Symbol	Name of each exchange on which registered
Common Shares, $0.10 par value	PSA	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value	PSAPrF	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value	PSAPrG	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value	PSAPrH	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value	PSAPrI	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value	PSAPrJ	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value	PSAPrK	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value	PSAPrL	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value	PSAPrM	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value	PSAPrN	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value	PSAPrO	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value	PSAPrP	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value	PSAPrQ	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value	PSAPrR	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value	PSAPrS	New York Stock Exchange
Guarantee of 0.875% Senior Notes due 2032 issued by Public Storage Operating Company	PSA/32	New York Stock Exchange
Guarantee of 0.500% Senior Notes due 2030 issued by Public Storage Operating Company	PSA/30	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of April 23, 2024:

Common Shares of beneficial interest, $0.10 par value per share – 175,724,665 shares

PUBLIC STORAGE

INDEX

PART I	FINANCIAL INFORMATION	Pages
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Equity	4
	Consolidated Statements of Cash Flows	6
	Condensed Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II	OTHER INFORMATION (Items 3 and 4 are not applicable)
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	45
Item 6.	Exhibits	45

PUBLIC STORAGE

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
Cash and equivalents	$	271,645	$	370,002
Real estate facilities, at cost:
Land	5,628,128		5,628,488
Buildings	21,970,032		21,836,750
	27,598,160		27,465,238
Accumulated depreciation	(9,671,521)		(9,423,974)
	17,926,639		18,041,264
Construction in process	389,278		345,453
	18,315,917		18,386,717
Investments in unconsolidated real estate entities	389,048		390,180
Goodwill and other intangible assets, net	351,465		387,267
Other assets	289,310		275,050
Total assets	$	19,617,385	$	19,809,216
LIABILITIES AND EQUITY
Notes payable	$	9,067,890	$	9,103,277
Accrued and other liabilities	504,197		598,993
Total liabilities	9,572,087		9,702,270
Commitments and contingencies (Note 14)
Equity:
Public Storage shareholders’ equity:
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 shares at December 31, 2023) at liquidation preference	4,350,000		4,350,000
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,723,561 shares issued and outstanding (175,670,727 shares at December 31, 2023)	17,572		17,567
Paid-in capital	5,991,606		5,980,760
Accumulated deficit	(336,003)		(267,910)
Accumulated other comprehensive loss	(74,513)		(67,239)
Total Public Storage shareholders’ equity	9,948,662		10,013,178
Noncontrolling interests	96,636		93,768
Total equity	10,045,298		10,106,946
Total liabilities and equity	$	19,617,385	$	19,809,216

See accompanying notes.

1

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Revenues:
Self-storage facilities	$	1,086,045	$	1,032,184
Ancillary operations	71,175		62,048
	1,157,220		1,094,232
Expenses:
Self-storage cost of operations	297,414		268,615
Ancillary cost of operations	27,069		19,676
Depreciation and amortization	285,203		221,650
Real estate acquisition and development expense	3,717		5,481
General and administrative	21,336		16,958
Interest expense	67,778		36,101
	702,517		568,481
Other increases (decreases) to net income:
Interest and other income	13,966		18,634
Equity in earnings of unconsolidated real estate entities	6,090		5,995
Foreign currency exchange gain (loss)	37,543		(26,860)
Gain on sale of real estate	874		—
Income before income tax expense	513,176		523,520
Income tax expense	(1,479)		(3,105)
Net income	511,697		520,415
Allocation to noncontrolling interests	(2,749)		(2,707)
Net income allocable to Public Storage shareholders	508,948		517,708
Allocation of net income to:
Preferred shareholders	(48,678)		(48,678)
Restricted share units and unvested LTIP units	(1,061)		(1,442)
Net income allocable to common shareholders	$	459,209	$	467,588
Net income per common share:
Basic	$	2.61	$	2.67
Diluted	$	2.60	$	2.65
Basic weighted average common shares outstanding	175,700		175,451
Diluted weighted average common shares outstanding	176,350		176,228

See accompanying notes.

2

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net income	$	511,697	$	520,415
Foreign currency translation (loss) gain on investment in Shurgard	(7,275)		3,869
Total comprehensive income	504,422		524,284
Allocation to noncontrolling interests	(2,748)		(2,707)
Comprehensive income allocable to Public Storage shareholders	$	501,674	$	521,577

See accompanying notes.

3

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended March 31, 2024

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity
Balances at December 31, 2023	$	4,350,000	$	17,567	$	5,980,760	$	(267,910)	$	(67,239)	$	10,013,178	$	93,768	$	10,106,946
Issuance of common shares in connection with share-based compensation (52,834 shares) (Note 11)	—		5		7,828		—		—		7,833		—		7,833
Taxes withheld upon net share settlement of restricted share units (Note 11)	—		—		(5,328)		—		—		(5,328)		—		(5,328)
Share-based compensation cost (Note 11)	—		—		11,305		—		—		11,305		—		11,305
Contributions by noncontrolling interests	—		—		—		—		—		—		1,327		1,327
Net income	—		—		—		511,697		—		511,697		—		511,697
Net income allocated to noncontrolling interests	—		—		—		(2,749)		—		(2,749)		2,749		—
Reallocation of equity	—		—		(2,959)		—		—		(2,959)		2,959		—
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(48,678)		—		(48,678)		—		(48,678)
Noncontrolling interests	—		—		—		—		—		—		(4,166)		(4,166)
Common shareholders, restricted share unitholders and unvested LTIP unitholders ($3.00 per share/unit) (Note 9)	—		—		—		(528,363)		—		(528,363)		—		(528,363)
Other comprehensive loss	—		—		—		—		(7,274)		(7,274)		(1)		(7,275)
Balances at March 31, 2024	$	4,350,000	$	17,572	$	5,991,606	$	(336,003)	$	(74,513)	$	9,948,662	$	96,636	$	10,045,298

See accompanying notes.

4

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended March 31, 2023

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity
Balances at December 31, 2022	$	4,350,000	$	17,527	$	5,896,423	$	(110,231)	$	(80,317)	$	10,073,402	$	93,399	$	10,166,801
Issuance of common shares in connection with share-based compensation (200,554 shares)	—		20		25,159		—		—		25,179		—		25,179
Taxes withheld upon net settlement of restricted share units	—		—		(8,932)		—		—		(8,932)		—		(8,932)
Share-based compensation cost	—		—		10,914		—		—		10,914		—		10,914
Contributions by noncontrolling interests	—		—		—		—		—		—		4		4
Net income	—		—		—		520,415		—		520,415		—		520,415
Net income allocated to noncontrolling interests	—		—		—		(2,707)		—		(2,707)		2,707		—
Distributions to:
Preferred shareholders	—		—		—		(48,678)		—		(48,678)		—		(48,678)
Noncontrolling interests	—		—		—		—		—		—		(3,773)		(3,773)
Common shareholders and restricted share unitholders ($3.00 per share)	—		—		—		(527,751)		—		(527,751)		—		(527,751)
Other comprehensive income	—		—		—		—		3,869		3,869		—		3,869
Balances at March 31, 2023	$	4,350,000	$	17,547	$	5,923,564	$	(168,952)	$	(76,448)	$	10,045,711	$	92,337	$	10,138,048

See accompanying notes.

5

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income	$	511,697	$	520,415
Adjustments to reconcile net income to net cash flows from operating activities:
Gain on sale of real estate	(874)		—
Depreciation and amortization	285,203		221,650
Equity in earnings of unconsolidated real estate entities	(6,090)		(5,995)
Distributions from cumulative equity in earnings of unconsolidated real estate entities	352		324
Unrealized foreign currency exchange (gain) loss	(37,467)		26,825
Share-based compensation expense	10,347		9,845
Other non-cash adjustments	2,781		2,890
Changes in operating assets and liabilities, excluding the impact of acquisitions:
Other assets	(16,231)		(36,611)
Accrued and other liabilities	(84,132)		(42,450)
Net cash flows from operating activities	665,586		696,893
Cash flows from investing activities:
Capital expenditures to maintain real estate facilities	(66,376)		(57,289)
Capital expenditures for property enhancements	(25,046)		(29,783)
Capital expenditures for energy efficiencies (LED lighting, solar)	(13,058)		(9,570)
Development and expansion of real estate facilities	(84,527)		(68,874)
Acquisition of real estate facilities and intangible assets	—		(46,795)
Proceeds from sale of real estate investments	2,423		—
Net cash flows used in investing activities	(186,584)		(212,311)
Cash flows from financing activities:
Repayments of notes payable	(36)		(129)
Issuance of common shares in connection with share-based compensation	7,800		25,116
Taxes paid upon net share settlement of restricted share units	(5,328)		(8,932)
Contributions by noncontrolling interests	1,327		4
Distributions paid to preferred shareholders, common shareholders, restricted share unitholders and unvested LTIP unitholders	(576,792)		(576,251)
Distributions paid to noncontrolling interests	(4,166)		(3,773)
Net cash flows used in financing activities	(577,195)		(563,965)
Net decrease in cash and equivalents, including restricted cash	$	(98,193)	$	(79,383)

See accompanying notes.

6

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2024		2023
Cash and equivalents, including restricted cash at beginning of the period:
Cash and equivalents	$	370,002	$	775,253
Restricted cash included in other assets	30,373		29,904
	$	400,375	$	805,157
Cash and equivalents, including restricted cash at end of the period:
Cash and equivalents	$	271,645	$	695,424
Restricted cash included in other assets	30,537		30,350
	$	302,182	$	725,774
Supplemental schedule of non-cash investing and financing activities:
Costs incurred during the period remaining unpaid at period end for:
Capital expenditures to maintain real estate facilities	$	(5,976)	$	(7,105)
Capital expenditures for property enhancements	(2,580)		(4,029)
Capital expenditures for energy efficiencies (LED lighting, solar)	(702)		(380)
Construction or expansion of real estate facilities	(41,460)		(50,625)
Supplemental cash flow information:
Cash paid for interest, net of amounts capitalized	$	75,745	$	20,803
Cash paid for income taxes, net of refunds	1,521		1,101

See accompanying notes.

7

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

1.Description of the Business

Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”) is a Maryland real estate investment trust (“REIT”) engaged in the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.

Effective August 14, 2023, we are structured as an umbrella partnership REIT, or UPREIT, under which substantially all of our business is conducted through Public Storage OP, L.P. (“PSA OP”), an operating partnership, and its subsidiaries including Public Storage Operating Company (“PSOC”). The primary assets of the parent entity, Public Storage, are general partner and limited partner interests in PSA OP, which holds all of the Company’s assets through its ownership of all of the membership interests in PSOC. As a limited partnership, PSA OP is a variable interest entity and is consolidated by the Company as its primary beneficiary. As of March 31, 2024, the Company owned all of the general partner interests and approximately 99.95% of the limited partnership interests of PSA OP, with the remaining 0.05% of limited partnership interests owned by certain trustees and officers of the Company.

At March 31, 2024, we owned equity interests in 3,045 self-storage facilities (with approximately 218.4 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.1 million net rentable square feet of commercial and retail space. In addition, we managed 235 facilities for third parties at March 31, 2024.

At March 31, 2024, we owned a 35% common equity interest in Shurgard Self Storage Limited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned 279 self-storage facilities (with approximately 15 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board, and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Certain amounts previously reported in our March 31, 2023 Consolidated Statements of Income have been reclassified to conform to the March 31, 2024 presentation, with respect to the separate presentation of real estate acquisition and development expense in the amount of $5.5 million for the three months ended March 31, 2023, previously included in general and administrative expense. The reclassification had no impact on our net income.

Certain amounts previously reported in our March 31, 2023 Statements of Cash Flows have been reclassified to conform to the March 31, 2024 presentation, with respect to the major types of capital expenditures in the cash flows from investing activities section. The reclassifications did not affect the subtotals for cash flows from operating, investing or financing activities.

Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 14) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).

8

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Summary of Significant Accounting Policies

There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

3.Real Estate Facilities

Activity in real estate facilities during the three months ended March 31, 2024 is as follows:

	Three Months Ended March 31, 2024
	(Amounts in thousands)
Operating facilities, at cost:
Beginning balance	$	27,465,238
Capital expenditures to maintain real estate facilities	58,056
Capital expenditures for property enhancements	27,626
Capital expenditures for energy efficiencies (LED lighting, solar)	13,760
Dispositions and other	(1,549)
Developed or expanded facilities opened for operation	35,029
Ending balance	27,598,160
Accumulated depreciation:
Beginning balance	(9,423,974)
Depreciation expense	(247,547)
Ending balance	(9,671,521)
Construction in process:
Beginning balance	345,453
Costs incurred to develop and expand real estate facilities	79,322
Write-off of cancelled projects	(468)
Developed or expanded facilities opened for operation	(35,029)
Ending balance	389,278
Total real estate facilities at March 31, 2024	$	18,315,917

During the three months ended March 31, 2024, we completed development and redevelopment activities costing $35.0 million, adding 0.3 million net rentable square feet of self-storage space. Construction in process at March 31, 2024 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.

In the three months ended March 31, 2024, we sold a land parcel for $2.4 million in cash and recorded gains on sale of real estate of $0.9 million.

9

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

4.Investments in Unconsolidated Real Estate Entities

Throughout all periods presented, we had a 35% equity interest in Shurgard. On November 14, 2023, Shurgard issued 8,163,265 new common shares to institutional investors. Public Storage participated on a pro-rata basis in the offering and acquired 2,863,674 common shares for a cost of $112.6 million, maintaining our 35% equity interest in Shurgard. As a result of the offering, Shurgard common shares that we effectively owned increased from 31,268,459 to 34,132,133 as of March 31, 2024.

Based upon the closing price at March 31, 2024 (€41.38 per share of Shurgard common stock, at 1.079 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately $1.5 billion.

Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). During the three months ended March 31, 2024 and 2023, we received $1.0 million and $0.9 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark, respectively. We eliminated $0.4 million and $0.3 million of intra-entity profits and losses for the three months ended March 31, 2024 and 2023, respectively, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.

At March 31, 2024, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately $61.3 million ($63.7 million at December 31, 2023). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $2.4 million and $4.5 million during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and 2023, we translated the book value of our investment in Shurgard from Euro to U.S. Dollars and recorded $7.3 million other comprehensive loss and $3.9 million other comprehensive income during the three months ended March 31, 2024 and 2023, respectively.

5.Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following (amounts in thousands):

	At March 31, 2024						At December 31, 2023
	Gross Book Value		Accumulated Amortization		Net Book Value		Gross Book Value		Accumulated Amortization		Net Book Value
Goodwill	$	165,843	$	—	$	165,843	$	165,843	$	—	$	165,843
Shurgard® Trade Name	18,824		—		18,824		18,824		—		18,824
Finite-lived intangible assets, subject to amortization	995,578		(828,780)		166,798		995,578		(792,978)		202,600
Total goodwill and other intangible assets	$	1,180,245	$	(828,780)	$	351,465	$	1,180,245	$	(792,978)	$	387,267

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $35.8 million and $14.6 million for the three months ended March 31, 2024 and 2023, respectively.

10

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The estimated future amortization expense for our finite-lived intangible assets at March 31, 2024 is as follows (amounts in thousands):

Year	Amount
Remainder of 2024	$	80,536
2025	60,467
2026	19,129
2027	2,797
2028	377
Thereafter	3,492
Total	$	166,798

6.Credit Facility

On June 12, 2023, PSOC entered into an amended revolving credit agreement (the “Credit Facility”), which increased our borrowing limit from $500 million to $1.5 billion and extended the maturity date from April 19, 2024 to June 12, 2027. We have the option to further extend the maturity date by up to one additional year with additional extension fees up to 0.125% of the extended commitment amount. Amounts drawn on the Credit Facility bear annual interest at rates ranging from SOFR plus 0.65% to SOFR plus 1.40% depending upon our credit rating (SOFR plus 0.70% at March 31, 2024). We are also required to pay a quarterly facility fee ranging from 0.10% per annum to 0.30% per annum depending upon our credit rating (0.10% per annum at March 31, 2024). At March 31, 2024 and April 30, 2024, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $14.6 million at March 31, 2024 ($14.6 million at December 31, 2023). The Credit Facility has various customary restrictive covenants with which we were in compliance at March 31, 2024.

Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under the Credit Facility.

11

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

7.Notes Payable

Our notes payable (all of which were issued by PSOC), are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at March 31, 2024 and December 31, 2023 are set forth in the tables below:

			Amounts at March 31, 2024								Amounts at  December 31, 2023
	Coupon Rate	Effective Rate	Principal		Unamortized Costs		Book  Value		Fair  Value		Book  Value		Fair  Value
			($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024	SOFR+0.47%	5.818%	$	700,000	$	(45)	$	699,955	$	700,123	$	699,779	$	700,031
Notes due July 25, 2025	SOFR+0.60%	5.948%	400,000		(1,074)		398,926		400,990		398,722		400,295
Notes due February 15, 2026	0.875%	1.030%	500,000		(1,396)		498,604		462,641		498,419		462,362
Notes due November 9, 2026	1.500%	1.640%	650,000		(2,269)		647,731		596,394		647,513		597,131
Notes due September 15, 2027	3.094%	3.218%	500,000		(1,832)		498,168		473,279		498,036		476,394
Notes due May 1, 2028	1.850%	1.962%	650,000		(2,752)		647,248		578,980		647,078		584,520
Notes due November 9, 2028	1.950%	2.044%	550,000		(2,217)		547,783		485,904		547,663		490,758
Notes due January 15, 2029	5.125%	5.260%	500,000		(2,800)		497,200		508,982		497,053		516,899
Notes due May 1, 2029	3.385%	3.459%	500,000		(1,559)		498,441		469,267		498,363		477,692
Notes due May 1, 2031	2.300%	2.419%	650,000		(4,841)		645,159		549,167		644,988		562,240
Notes due November 9, 2031	2.250%	2.322%	550,000		(2,695)		547,305		456,506		547,218		469,845
Notes due August 1, 2033	5.100%	5.207%	700,000		(5,407)		694,593		702,013		694,448		725,753
Notes due August 1, 2053	5.350%	5.442%	600,000		(7,915)		592,085		599,071		592,017		628,413
			7,450,000		(36,802)		7,413,198		6,983,317		7,411,297		7,092,333
Euro Denominated Unsecured Debt
Notes due April 12, 2024	1.540%	1.540%	107,930		—		107,930		107,792		110,372		109,380
Notes due November 3, 2025	2.175%	2.175%	261,205		—		261,205		254,901		267,116		261,083
Notes due September 9, 2030	0.500%	0.640%	755,509		(7,210)		748,299		624,319		765,119		638,177
Notes due January 24, 2032	0.875%	0.978%	539,649		(4,188)		535,461		445,722		547,540		455,895
			1,664,293		(11,398)		1,652,895		1,432,734		1,690,147		1,464,535
Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.5 million	4.374%	4.374%	1,797		—		1,797		1,734		1,833		1,733
			$	9,116,090	$	(48,200)	$	9,067,890	$	8,417,785	$	9,103,277	$	8,558,601

Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under each series of unsecured notes.

U.S. Dollar Denominated Unsecured Notes

The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants with which we were in compliance at March 31, 2024. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 17% at March 31, 2024) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 15x for the twelve months ended March 31, 2024) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

12

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Euro Denominated Unsecured Notes

At March 31, 2024, our Euro denominated unsecured notes (the “Euro Notes”) consisted of four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, (ii) €100.0 million issued to institutional investors on April 12, 2016, (iii) €500.0 million issued in a public offering on January 24, 2020, and (iv) €700.0 million issued in a public offering on September 9, 2021. The Euro Notes have financial covenants similar to those of the U.S. Dollar Denominated Unsecured Notes.

We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange gain (loss)” on our income statement (gains of $37.8 million and losses of $27.1 million for the three months ended March 31, 2024 and 2023, respectively).

Mortgage Notes

We assumed our non-recourse mortgage debt in connection with property acquisitions, and we recorded such debt at fair value with any premium or discount to the stated note balance amortized using the effective interest method.

At March 31, 2024, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.9% and 7.1%, and mature between September 1, 2028 and July 1, 2030.

At March 31, 2024, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):

	Unsecured Debt		Mortgage Debt		Total
Remainder of 2024	$	807,930	$	88	$	808,018
2025	661,205		131		661,336
2026	1,150,000		138		1,150,138
2027	500,000		146		500,146
2028	1,200,000		129		1,200,129
Thereafter	4,795,158		1,165		4,796,323
	$	9,114,293	$	1,797	$	9,116,090
Weighted average effective rate	3.1%		4.4%		3.1%

Interest capitalized as real estate totaled $2.4 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively.

8.Noncontrolling Interests

There are noncontrolling interests related to several subsidiaries of PSOC we consolidate of which we do not own 100% of the equity. At March 31, 2024, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are redeemable by the holders on a one-for-one basis for common shares of the Company or cash at our option. The holders of these partnership units are entitled to receive the same per-unit cash distributions equal to the dividends paid on our common shares.

13

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Noncontrolling interests also include the partnership interests of PSA OP not owned by the Company, including common units (“OP Units”) and vested LTIP units (“LTIP Units”) from equity awards we issue to certain officers and trustees of the Company (see Note 11 Share-based Compensation). Vested LTIP Units (subject to certain conditions) may be further converted into the same number of OP Units of PSA OP, which are redeemable by the holders on a one-for-one basis for common shares of the Company or cash at our option. The holders of OP Units and vested LTIP Units are entitled to receive per-unit cash distributions equal to the per-share dividends received by our common shareholders. At March 31, 2024, approximately 0.05% of the partnership interests of PSA OP, representing 83,051 Vested LTIP Units, were not owned by the Company. We adjust the balance of noncontrolling interests of PSA OP to reflect their proportionate share of the net assets of PSA OP as of the end of each period.

9.Shareholders’ Equity

Preferred Shares

At March 31, 2024 and December 31, 2023, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:

				At March 31, 2024			At December 31, 2023
Series	Earliest Redemption Date	Dividend Rate		Shares Outstanding	Liquidation Preference		Shares Outstanding	Liquidation Preference
				(Dollar amounts in thousands)
Series F	6/2/2022	5.150	%	11,200	$	280,000	11,200	$	280,000
Series G	8/9/2022	5.050	%	12,000	300,000		12,000	300,000
Series H	3/11/2024	5.600	%	11,400	285,000		11,400	285,000
Series I	9/12/2024	4.875	%	12,650	316,250		12,650	316,250
Series J	11/15/2024	4.700	%	10,350	258,750		10,350	258,750
Series K	12/20/2024	4.750	%	9,200	230,000		9,200	230,000
Series L	6/17/2025	4.625	%	22,600	565,000		22,600	565,000
Series M	8/14/2025	4.125	%	9,200	230,000		9,200	230,000
Series N	10/6/2025	3.875	%	11,300	282,500		11,300	282,500
Series O	11/17/2025	3.900	%	6,800	170,000		6,800	170,000
Series P	6/16/2026	4.000	%	24,150	603,750		24,150	603,750
Series Q	8/17/2026	3.950	%	5,750	143,750		5,750	143,750
Series R	11/19/2026	4.000	%	17,400	435,000		17,400	435,000
Series S	1/13/2027	4.100	%	10,000	250,000		10,000	250,000
Total Preferred Shares				174,000	$	4,350,000	174,000	$	4,350,000

The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At March 31, 2024, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.

14

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.

Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our consolidated balance sheet with any issuance costs recorded as a reduction to Paid-in capital.

Dividends and Distributions

Dividends and distributions paid to our common shareholders, restricted share unitholders, deferred share unitholders, and unvested LTIP unitholders, totaled $528.1 million ($3.00 per share/unit) and $527.6 million ($3.00 per share/unit) for the three months ended March 31, 2024 and 2023, respectively. In addition, we accrued $0.3 million and $0.2 million of dividends and distributions to holders of unearned performance-based restricted share units and LTIP Units for the three months ended March 31, 2024 and 2023, respectively. Preferred share dividends totaled $48.7 million for each of the three months ended March 31, 2024 and 2023.

10.Related Party Transactions

At March 31, 2024, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 66 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children own the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately $0.5 million for each of the three months ended March 31, 2024 and 2023.

11.Share-Based Compensation

Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred share units (“DSUs”), and unrestricted common shares issued in lieu of trustee compensation.

In February 2024, we amended our 2021 Equity and Performance-Based Incentive Plan to further provide for the grant of awards to certain officers and trustees of the Company in the form of LTIP Units and appreciation-only LTIP Units (“AO LTIP Units”) of PSA OP. LTIP Units are structured as “profit interests” for U.S. federal income tax purposes. During the three months ended March 31, 2024, we issued LTIP Units and AO LTIP Units in substitution for 156,632 RSUs and 2,102,424 stock options, respectively. The LTIP Units and AO LTIP Units issued have the same vesting conditions as the original awards and remain classified as equity awards. The fair value of the LTIP Units and AO LTIP Units issued is materially the same as the original awards immediately before the substitution. As a result, we did not adjust the share-based compensation costs associated with these substituted awards.

15

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.6 million and $0.7 million of share-based compensation cost was capitalized as real estate facilities for the three months ended March 31, 2024 and 2023, respectively.

	Three Months Ended March 31,
	2024		2023
	(Amounts in thousands)
Self-storage cost of operations	$	3,245	$	3,924
Ancillary cost of operations	376		317
Real estate acquisition and development expense	688		324
General and administrative	6,038		5,280
Total	$	10,347	$	9,845

As of March 31, 2024, there was $91.6 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years.

Restricted Share Units and LTIP Units

We have service-based and performance-based RSUs and LTIP Units outstanding, which generally vest over 5 to 8 years from the grant date. Performance-based RSUs and LTIP Units outstanding vest upon meeting certain performance conditions or market conditions. Upon vesting, the grantee of RSUs receives new common shares equal to the number of vested RSUs, less common shares withheld to satisfy the grantee’s statutory tax liabilities arising from the vesting. Vested LTIP Units represent noncontrolling interests of PSA OP and may be converted, subject to the satisfaction of all applicable vesting conditions, on a one-for-one basis into common units of PSA OP, which are exchangeable by the holders for cash, or at the Company’s election, on a one-for-one basis into common shares of the Company. Holders of RSUs and LTIP Units are entitled to receive per-unit cash distributions equal to the per-share dividends received by our common shareholders, except that holders of performance-based awards are not entitled to receive the full distributions until expiration of the applicable performance period, at which time holders of any earned performance-based awards are entitled to receive a catch-up distribution for the periods prior to such time.

Below is a summary of award activity issued in the form of RSUs and LTIP Units for the three months ended March 31, 2024.

	Service-Based	Performance-Based (a)	Total
Unvested awards outstanding January 1, 2024	322,648	94,013	416,661
Granted (b)	4,470	34,550	39,020
Vested (c)	(55,481)	(9,250)	(64,731)
Forfeited	(7,365)	—	(7,365)
Unvested awards outstanding March 31, 2024	264,272	119,313	383,585

(a)Number of performance-based awards are presented based on the target performance pursuant to the terms of each applicable award when granted and adjusted to the actual number of awards earned based on the actual performance.

16

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

(b)During the three months ended March 31, 2024, 34,550 performance-based LTIP Unit awards (at target) were granted to certain executive officers, where vesting is dependent upon meeting certain market conditions over a three-year period from March 5, 2024 through March 4, 2027, with continued service-based vesting through the first quarter of 2029. These LTIP Unit awards require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning from zero to a maximum of 69,100 LTIP Units.

(c)16,914 common shares were issued from the vesting of RSUs.

For the three months ended March 31, 2024, we incurred share-based compensation cost for RSUs and LTIP Units of $7.9 million.

Stock Options and AO LTIP Units

We have service-based and performance-based stock options and AO LTIP Units outstanding. Performance-based stock options and AO LTIP Units vest upon meeting certain performance conditions or market conditions. Stock options and AO LTIP Units generally vest over 3 to 5 years, expire 10 years after the grant date, and have an exercise or conversion price equal to the closing trading price of our common shares on the grant date. Common shares of the Company are issued for options exercised and vested LTIP Units are issued for AO LTIP Units converted. Employees cannot require the Company to settle their awards in cash.

Below is a summary of award activity issued in the form of stock options and AO LTIP Units for the three months ended March 31, 2024.

	Service-Based	Performance-Based (a)	Total
Awards outstanding January 1, 2024	1,629,742	1,421,479	3,051,221
Granted (b)	64,278	63,717	127,995
Exercised or converted (c)	(111,048)	(27,616)	(138,664)
Awards outstanding March 31, 2024	1,582,972	1,457,580	3,040,552
Awards exercisable at March 31, 2024	1,394,671	885,994	2,280,665

(a)Number of performance-based awards are presented based on the target performance pursuant to the terms of each applicable award when granted and adjusted to the actual number of awards earned based on the actual performance.

(b)During the three months ended March 31, 2024, 64,278 of service-based and 63,717 of performance-based AO LTIP Unit awards (at target) were granted to certain executive officers. The vesting of the performance-based AO LTIP Unit awards is dependent upon meeting certain market conditions over a three-year period from March 5, 2024 through March 4, 2027, with continued service-based vesting through the first quarter of 2029. These performance-based AO LTIP Unit awards require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning from zero to a maximum of 127,434 AO LTIP Units.

(c)35,389 common shares were issued upon the exercise of stock options. 44,058 vested LTIP Units were issued upon conversion of 103,275 AO LTIP Units in the three months ended March 31, 2024.

For the three months ended March 31, 2024, we incurred share-based compensation cost for stock options and AO LTIP Units of $2.9 million.

17

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Trustee Deferral Program

Non-management trustees may elect to receive all or a portion of their cash retainers in cash, unrestricted common shares, or fully-vested DSUs to be settled at a specified future date. Unrestricted common shares and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the three months ended March 31, 2024, we granted 560 DSUs and 115 unrestricted common shares. During the three months ended March 31, 2024, 416 previously granted DSUs were settled in common shares. A total of 10,913 DSUs were outstanding at March 31, 2024 (10,769 at December 31, 2023).

12.Net Income per Common Share

We allocate net income to (i) noncontrolling interests based upon their contractual rights in the respective subsidiaries or for participating noncontrolling interests based upon their participation in both distributed and undistributed earnings of the Company, (ii) preferred shareholders, for distributions paid or payable, (iii) preferred shareholders, to the extent redemption cost exceeds the related original net issuance proceeds (a “preferred share redemption charge”), and (iv) RSUs and unvested LTIP Units, for non-forfeitable dividends and distributions paid and adjusted for participation rights in undistributed earnings of the Company.

We calculate basic and diluted net income per common share based upon net income allocable to common shareholders, divided by (i) weighted average common shares for basic net income per common share, and (ii) weighted average common shares adjusted for the impact of dilutive stock options and AO LTIP Units outstanding for diluted net income per common share. Stock options and AO LTIP Units representing 443,336 common shares were excluded from the computation of diluted earnings per share for the three months ended March 31, 2024, as compared to 264,512 common shares for the same period in 2023, because their effect would have been antidilutive.

The following table reconciles the numerators and denominators of the basic and diluted net income per common shares computation for the three months ended March 31, 2024 and 2023, respectively (in thousands, except per share amounts):

	Three Months Ended March 31,
	2024		2023
Numerator for basic and dilutive net income per common share – net income allocable to common shareholders	$	459,209	$	467,588
Denominator for basic net income per share - weighted average common shares outstanding	175,700		175,451
Net effect of dilutive stock options and AO LTIP Units - based on treasury stock method	650		777
Denominator for dilutive net income per share - weighted average common shares outstanding	176,350		176,228
Net income per common share:
Basic	$	2.61	$	2.67
Dilutive	$	2.60	$	2.65

18

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

13.Segment Information

Our operating segments reflect the significant components of our operations where discrete financial information is evaluated separately by our chief operating decision maker.

Self-Storage Operations

The Self-Storage Operations reportable segment reflects the aggregated rental operations from the self-storage facilities we own through the following operating segments: (i) Same Store Facilities, (ii) Acquired Facilities, (iii) Newly Developed and Expanded Facilities, and (iv) Other Non-Same Store Facilities. The presentation in the table below sets forth the Net Operating Income (“NOI”) of this reportable segment, as well as the related depreciation expense. For all periods presented, substantially all of our real estate facilities, goodwill and other intangible assets, other assets, and accrued and other liabilities are associated with the Self-Storage Operations reportable segment.

Ancillary Operations

The Ancillary Operations reflects the combined operations of our tenant reinsurance, merchandise sales, and third party property management operating segments.

Presentation of Segment Information

The following table reconciles NOI and net income attributable to our reportable segment to our consolidated net income:

	Three Months Ended March 31,
	2024		2023
	(amounts in thousands)
Self-Storage Operations Reportable Segment
Revenue	$	1,086,045	$	1,032,184
Cost of operations	(297,414)		(268,615)
Net operating income	788,631		763,569
Depreciation and amortization	(285,203)		(221,650)
Net income	503,428		541,919
Ancillary Operations
Revenue	71,175		62,048
Cost of operations	(27,069)		(19,676)
Net operating income	44,106		42,372
Total net income allocated to segments	547,534		584,291
Other items not allocated to segments:
Real estate acquisition and development expense	(3,717)		(5,481)
General and administrative	(21,336)		(16,958)
Interest and other income	13,966		18,634
Interest expense	(67,778)		(36,101)
Equity in earnings of unconsolidated real estate entities	6,090		5,995
Foreign currency exchange gain (loss)	37,543		(26,860)
Gain on sale of real estate	874		—
Income tax expense	(1,479)		(3,105)
Net income	$	511,697	$	520,415

19

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

14.Commitments and Contingencies

Contingent Losses

We are a party to various legal proceedings and subject to various claims and complaints; however, we believe that the likelihood of these contingencies resulting in a material loss to the Company, either individually or in the aggregate, is remote.

Insurance and Loss Exposure

We carry property, earthquake, general liability, employee medical insurance, and workers compensation coverage through internationally recognized insurance carriers, subject to deductibles. Our deductible for general liability is $2.0 million per occurrence. Our annual deductible for property loss is $25.0 million per occurrence. This deductible decreases to $5.0 million once we reach $35.0 million in aggregate losses for occurrences that exceed $5.0 million. Insurance carriers’ aggregate limits on these policies of $75.0 million for property losses and $102.0 million for general liability losses are higher than estimates of maximum probable losses that could occur from individual catastrophic events determined in recent engineering and actuarial studies; however, in case of multiple catastrophic events, these limits could be exceeded.

We reinsure a program that provides insurance to our customers from an independent third-party insurer. This program covers customer claims for losses to goods stored at our facilities as a result of specific named perils (earthquakes are not covered by this program), up to a maximum limit of $5,000 per storage unit. We reinsure all risks in this program, but purchase insurance to cover this exposure for a limit of $15.0 million for losses in excess of $5.0 million per occurrence. We are subject to licensing requirements and regulations in all states. Customers participate in the program at their option. At March 31, 2024, there were approximately 1.4 million certificates held by our self-storage customers, representing aggregate coverage of approximately $6.5 billion.

Commitments

We have construction commitments representing future expected payments for construction under contract totaling $143.4 million at March 31, 2024. We expect to pay approximately $113.5 million in the remainder of 2024 and $29.9 million in 2025 for these construction commitments.

We have future contractual payments on land, equipment and office space under various lease commitments totaling $64.4 million at March 31, 2024. We expect to pay approximately $2.9 million in the remainder of 2024, $4.1 million in 2025, $4.0 million in 2026, $2.6 million in 2027, $2.5 million in 2028, and $48.3 million thereafter for these commitments.

15.Subsequent Events

On April 11, 2024, PSOC issued €150 million of senior notes to institutional investors, bearing interest at a fixed rate of 4.080% and maturing on April 11, 2039. The senior notes are guaranteed by Public Storage. We received $162.6 million of net proceeds from the issuance after converting the Euros to U.S. Dollars. On April 11, 2024, we repaid PSOC’s €100 million 1.540% senior notes due April 12, 2024 to the same institutional investors for $108.4 million.

On April 16, 2024, PSOC completed a public offering of $1.0 billion aggregate principal amount of senior notes, including $700 million aggregate principal amount of floating rate senior notes bearing interest at a rate of Compounded SOFR + 0.70% (reset quarterly) maturing on April 16, 2027 and $300 million aggregate principal amount of senior notes bearing interest at a fixed annual rate of 5.350% maturing on August 1, 2053. The 2053 notes constitute a further issuance of, and form a single series with, our outstanding 5.350% senior notes due 2053 issued on July 26, 2023 in the aggregate principal amount of $600 million. These senior notes are guaranteed by Public Storage. We received $988.5 million of net proceeds from the offering. On April 23, 2024, we repaid our outstanding $700 million aggregate principal amount of floating rate senior notes at maturity.

Subsequent to March 31, 2024, we acquired or were under contract to acquire four self-storage facilities across four states with 0.3 million net rentable square feet, for $34.6 million.

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ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements relating to our 2024 outlook and all underlying assumptions, our expected acquisition, disposition, development, and redevelopment activity, supply and demand for our self-storage facilities, information relating to operating trends in our markets, expectations regarding operating expenses, including property tax changes, expectations regarding the impacts from inflation and changes in macroeconomic conditions, our strategic priorities, expectations with respect to financing activities, rental rates, cap rates, and yields, leasing expectations, our credit ratings, and all other statements other than statements of historical fact. Such statements are based on management’s beliefs and assumptions made based on information currently available to management and may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions.

These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2024 and in our other filings with the SEC. These include changes in demand for our facilities, changes in macroeconomic conditions, changes in national self-storage facility development activity, impacts of natural disasters, adverse changes in laws and regulations including governing property tax, evictions, rental rates, minimum wage levels, and insurance, adverse economic effects from public health emergencies, international military conflicts, or similar events impacting public health and/or economic activity, increases in the costs of our primary customer acquisition channels, adverse impacts to us and our customers from high interest rates, inflation, unfavorable foreign currency rate fluctuations, or changes in federal or state tax laws related to the taxation of REITs, security breaches, including ransomware, or a failure of our networks, systems, or technology.

These forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements. All of our forward-looking statements, including those in this report, are qualified in their entirety by this cautionary statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether because of new information, new estimates, or other factors, events or circumstances after the date of these forward-looking statements, except when expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this report, or which management may make orally or in writing from time to time, neither as predictions of future events nor guarantees of future performance.

Critical Accounting Estimates

The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make judgments, assumptions, and estimates that affect the amounts reported. On an ongoing basis, we evaluate our estimates and assumptions. These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, revenues, and expenses that are not readily apparent from other sources.

During the three months ended March 31, 2024, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

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Overview

During the three months ended March 31, 2024, revenues generated by our Same Store Facilities (as defined below) increased by 0.1% ($0.6 million), as compared to the same period in 2023, while Same Store cost of operations increased by 4.8% ($10.9 million). Demand and operating trends softened in the second half of 2022 continuing through 2023 and the first quarter of 2024, and we expect these trends to continue and stabilize in the second half of 2024.

We have grown and plan to continue to grow through the acquisition and development of new facilities and expansion of our existing self-storage facilities. Since the beginning of 2022, we acquired a total of 238 facilities with 16.8 million net rentable square feet for $3.4 billion. Additionally, within our non-same store portfolio, our Newly Developed and Expanded Facilities (as defined below) include a total of 123 self-storage facilities with 14.3 million net rentable square feet. For development and expansions completed by March 31, 2024, we incurred a total cost of $1.3 billion. During the three months ended March 31, 2024, combined net operating income generated by our Acquired Facilities (as defined below) and Newly Developed and Expanded Facilities increased 82.7% ($32.5 million), as compared to the same period in 2023.

We have experienced recent inflationary impacts on our cost of operations including labor, utilities, and repairs and maintenance, and costs of development and expansion activities, and we expect to experience such impacts in the future. We have implemented various initiatives to manage the adverse impacts, such as enhancements in operational processes and investments in technology to reduce payroll hours, achievement of economies of scale from recent acquisitions with supervisory payroll and centralized management costs allocated over a broader number of self-storage facilities, and investments in solar power and LED lights to lower utility usage.

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed facilities), we have embarked on our multi-year Property of Tomorrow program to (i) rebrand our properties with more pronounced, attractive, and clearly identifiable color schemes and signage and (ii) upgrade the configuration and layout of the offices and other customer zones to improve the customer experience. We expect to complete the program in 2024. We spent approximately $25 million on the program in the three months ended March 31, 2024 and expect to spend approximately $150 million over 2024 on this effort. We have also embarked on a solar program under which we plan to install solar panels on over 1,000 of our self-storage facilities. We have completed the installations on 519 facilities through March 31, 2024. We spent approximately $13 million on the program in the three months ended March 31, 2024 and expect to spend $100 million over 2024 on this effort.

On April 11, 2024, PSOC issued €150 million of senior notes to institutional investors, bearing interest at a fixed rate of 4.080% and maturing on April 11, 2039. The senior notes are guaranteed by Public Storage. We received $162.6 million of net proceeds from the issuance after converting the Euros to U.S. Dollars. On April 11, 2024, we repaid PSOC’s €100 million 1.540% senior notes due April 12, 2024 to the same institutional investors for $108.4 million.

On April 16, 2024, PSOC completed a public offering of $1.0 billion aggregate principal amount of senior notes, including $700 million aggregate principal amount of floating rate senior notes bearing interest at a rate of Compounded SOFR + 0.70% (reset quarterly) maturing on April 16, 2027 and $300 million aggregate principal amount of senior notes bearing interest at a fixed annual rate of 5.350% maturing on August 1, 2053. The 2053 notes constitute a further issuance of, and form a single series with, our outstanding 5.350% senior notes due 2053 issued on July 26, 2023 in the aggregate principal amount of $600 million. These senior notes are guaranteed by Public Storage. We received $988.5 million of net proceeds from the offering. On April 23, 2024, we repaid our outstanding $700 million aggregate principal amount of floating rate senior notes at maturity.

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Results of Operations

Operating Results for the Three Months Ended March 31, 2024 and 2023

For the three months ended March 31, 2024, net income allocable to our common shareholders was $459.2 million or $2.60 per diluted common share, compared to $467.6 million or $2.65 per diluted common share for the same period in 2023, representing a decrease of $8.4 million or $0.05 per diluted common share. The decrease is due primarily to (i) a $63.6 million increase in depreciation and amortization expense and (ii) a $31.7 million increase in interest expense, partially offset by (iii) a $64.4 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable and (iv) a $25.1 million increase in self-storage net operating income.

The $25.1 million increase in self-storage net operating income in the three months ended March 31, 2024 as compared to the same period in 2023 is a result of a $35.4 million increase attributable to our non-same store facilities, partially offset by a $10.3 million decrease attributable to our Same Store Facilities. Revenues for the Same Store Facilities increased 0.1% or $0.6 million in the three months ended March 31, 2024 as compared to the same period in 2023, due primarily to a higher realized annual rent per occupied square foot, partially offset by a decline in occupancy. Cost of operations for the Same Store Facilities increased by 4.8% or $10.9 million in the three months ended March 31, 2024 as compared to the same period in 2023, due primarily to increased property tax expense and marketing expense. The increase in net operating income of $35.4 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2023 and the fill-up of recently developed and expanded facilities.

Funds from Operations and Core Funds from Operations

Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by Nareit. We believe that FFO and FFO per share are useful to REIT investors and analysts in measuring our performance because Nareit’s definition of FFO excludes items included in net income that do not relate to or are not indicative of our operating and financial performance. FFO represents net income before real estate-related depreciation and amortization, which is excluded because it is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FFO also excludes gains or losses on sale of real estate assets and real estate impairment charges, which are also based upon historical costs and are impacted by historical depreciation. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes investing and financing activities presented on our consolidated statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful.

For the three months ended March 31, 2024, FFO was $4.24 per diluted common share as compared to $3.94 per diluted common share for the same period in 2023, representing an increase of 7.6%, or $0.30 per diluted common share.

We also present “Core FFO” and “Core FFO per share” non-GAAP measures that represent FFO and FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) charges related to the redemption of preferred securities, and (iii) certain other non-cash and/or nonrecurring income or expense items primarily representing, with respect to the periods presented below, the impact of loss contingency resolutions, due diligence costs incurred in pursuit of strategic transactions, unrealized gain on private equity investments, and amortization of acquired non real estate-related intangibles. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance and we believe they are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share are not substitutes for net income and net income per share. Because other REITs may not compute Core FFO or Core FFO per share in the same manner as we do, may not use the same terminology or may not present such measures, Core FFO and Core FFO per share may not be comparable among REITs.

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The following table reconciles net income to FFO and Core FFO and reconciles diluted earnings per share to FFO per share and Core FFO per share:

	Three Months Ended March 31,
	2024		2023		Percentage Change
	(Amounts in thousands, except per share data)
Reconciliation of Net Income to FFO and Core FFO:
Net income allocable to common shareholders	$	459,209	$	467,588	(1.8)	%
Eliminate items excluded from FFO:
Real estate-related depreciation and amortization	282,203		219,787
Real estate-related depreciation from unconsolidated real estate investments	9,756		8,529
Real estate-related depreciation allocated to noncontrolling interests and restricted share unitholders and unvested LTIP unitholders	(1,835)		(1,473)
Gains on sale of real estate investments, including our equity share from investments	(871)		—
FFO allocable to common shares	$	748,462	$	694,431	7.8	%
Eliminate the impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss	(37,543)		26,860
Other items	51		(2,133)
Core FFO allocable to common shares	$	710,970	$	719,158	(1.1)	%
Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:
Diluted earnings per share	$	2.60	$	2.65	(1.9)	%
Eliminate amounts per share excluded from FFO:
Real estate-related depreciation and amortization	1.65		1.29
Gains on sale of real estate investments, including our equity share from investments	(0.01)		—
FFO per share	$	4.24	$	3.94	7.6	%
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss	(0.21)		0.15
Other items	—		(0.01)
Core FFO per share	$	4.03	$	4.08	(1.2)	%
Diluted weighted average common shares	176,350		176,228

Analysis of Net Income — Self-Storage Operations

Our self-storage operations are analyzed in four groups: (i) the 2,507 facilities that we have owned and operated on a stabilized basis since January 1, 2022 (the “Same Store Facilities”), (ii) 238 facilities we acquired since January 1, 2022 (the “Acquired Facilities”), (iii) 123 facilities that have been newly developed or expanded, or that will commence expansion by December 31, 2024 (the “Newly Developed and Expanded Facilities”), and (iv) 177 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, 2022 (the “Other Non-same Store Facilities”). See Note 13 to our March 31, 2024 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.

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Self-Storage Operations
Summary	Three Months Ended March 31,
	2024		2023		Percentage Change
	(Dollar amounts and square footage in thousands)
Revenues:
Same Store Facilities	$	913,085	$	912,513	0.1	%
Acquired Facilities	58,453		11,981		387.9	%
Newly Developed and Expanded Facilities	52,866		48,635		8.7	%
Other Non-Same Store Facilities	61,641		59,055		4.4	%
	1,086,045		1,032,184		5.2	%
Cost of operations:
Same Store Facilities	235,673		224,792		4.8	%
Acquired Facilities	21,282		5,753		269.9	%
Newly Developed and Expanded Facilities	18,249		15,571		17.2	%
Other Non-Same Store Facilities	22,210		22,499		(1.3)	%
	297,414		268,615		10.7	%
Net operating income (a):
Same Store Facilities	677,412		687,721		(1.5)	%
Acquired Facilities	37,171		6,228		496.8	%
Newly Developed and Expanded Facilities	34,617		33,064		4.7	%
Other Non-Same Store Facilities	39,431		36,556		7.9	%
Total net operating income	788,631		763,569		3.3	%
Depreciation and amortization expense:
Same Store Facilities	165,057		157,396		4.9	%
Acquired Facilities	63,033		11,745		436.7	%
Newly Developed and Expanded Facilities	14,784		11,562		27.9	%
Other Non-Same Store Facilities	42,329		40,947		3.4	%
Total depreciation and amortization expense	285,203		221,650		28.7	%
Net income (loss):
Same Store Facilities	512,355		530,325		(3.4)	%
Acquired Facilities	(25,862)		(5,517)		368.8	%
Newly Developed and Expanded Facilities	19,833		21,502		(7.8)	%
Other Non-Same Store Facilities	(2,898)		(4,391)		(34.0)	%
Total net income	$	503,428	$	541,919	(7.1)	%
Number of facilities at period end:
Same Store Facilities	2,507		2,507		—	%
Acquired Facilities	238		79		201.3	%
Newly Developed and Expanded Facilities	123		114		7.9	%
Other Non-Same Store Facilities	177		177		—	%
	3,045		2,877		5.8	%
Net rentable square footage at period end:
Same Store Facilities	169,959		169,959		—	%
Acquired Facilities	16,807		5,038		233.6	%
Newly Developed and Expanded Facilities	14,318		12,468		14.8	%
Other Non-Same Store Facilities	17,316		17,412		(0.6)	%
	218,400		204,877		6.6	%

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(a)Net operating income or “NOI” is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense, which is based upon historical real estate costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. We utilize NOI in determining current property values, evaluating property performance, and evaluating property operating trends. We believe that investors and analysts utilize NOI in a similar manner. NOI is not a substitute for net income, operating cash flow, or other related financial measures, in evaluating our operating results. See Note 13 to our March 31, 2024 consolidated financial statements for a reconciliation of NOI to our total net income for all periods presented.

Same Store Facilities

The Same Store Facilities consist of facilities we have owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, 2022. Our Same Store Facilities increased from 2,339 facilities at December 31, 2023 to 2,507 at March 31, 2024. The composition of our Same Store Facilities allows us more effectively to evaluate the ongoing performance of our self-storage portfolio in 2022, 2023, and 2024 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. We believe investors and analysts use Same Store Facilities information in a similar manner. However, because other REITs may not compute Same Store Facilities in the same manner as we do, may not use the same terminology or may not present such a measure, Same Store Facilities may not be comparable among REITs.

The following table summarizes the historical operating results (for all periods presented) of these 2,507 facilities (170.0 million net rentable square feet) that represent approximately 78% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at March 31, 2024. It includes various measures and detail that we do not include in the analysis of the developed, acquired, and other non-same store facilities, due to the relative magnitude and importance of the Same Store Facilities relative to our other self-storage facilities.

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Selected Operating Data for the Same Store Facilities (2,507 facilities)

Three Months Ended March 31,
2024	2023	Change (e)
(Dollar amounts in thousands, except for per square foot data)